1. Field
Embodiments of the present invention generally relate to authorization of financial transactions, particularly to authorization of financial transactions based on financial risk involved in purchase orders.
2. Background Art
Financial transactions that use debit cards, credit cards, and other similar cashless methods for purchasing products are increasingly becoming popular. In a cashless financial transaction, a consumer needs to provide his or her card details or any other transaction-related details to a merchant while placing the purchase order. The merchant sends these details in the form of an authorization request to a financial institution for seeking authorization of the financial transaction. Thereafter, the financial institution decides whether to authorize the merchant to carry out the financial transaction or not, and transmits the decision to the merchant for execution.
The financial institution makes an authorization decision after assessing financial risk involved in the financial transaction. The authorization decision is based on the transaction-related details and other risk assessment parameters. These risk assessment parameters generally include consumer track record, consumer history, consumer profile, and the like. Typically, the merchant sends the transaction-related details, such as name of the cardholder, card number, card security number, expiry date of the card, and a merchant identifier, in the authorization request. Based on the transaction-related details, the financial institution verifies the authenticity of the card use and assesses the financial risk involved in the financial transaction.
It has been observed while assessing fraud cases and risk involved in the financial transactions that certain product ranges have a higher probability of fraud risk as compared with other product categories. However, existing methods of risk assessment and authorization of merchants do not include identification of product features.
In light of the foregoing, there is a need for a method and system for assessing financial risk involved in financial transactions before authorizing a merchant to execute the financial transaction. Further, the method and system should be capable of identifying product features during risk assessment.